A two-equation model below represents goods sector and monetary sector equilibrium for a hypothetical economy (1):Y=i 0 /1-c+b/1-c.r i 0 >0, b <0, 0 0,

A two-equation model below represents goods sector and monetary sector equilibrium for a

hypothetical economy

(1):Y=i₀/1-c+b/1-c.r i₀>0, b<0, 0

(2): Y=i₀-e/f-g/f.r L_o>0, f<0, g<0, e>0.

As usual, is aggregate income, is the interest rate,₀ is the autonomous investment, and₀ is the level of money supply.

i) List down the endogenous variables and the exogenous

variables of the model.

ii) Which equation represents the IS and which represents the LM

iii) Justify your answers found in ii).